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`Sify in no hurry over IPO' -- ESOP plan has to await new SEBI norms

Boby Kurian

BANGALORE, July 3

SATYAM Infoway, which last week indicated a domestic public offering, sees no immediate compulsion for an Indian IPO as there are no acquisitions lined up at present.

In an interview to Business Line, Mr. R. Ramaraj, CEO, Satyam Infoway, said: ``All that I have done is to meet SEBI and enquire whether Satyam Infoway is eligible for an IPO. We will plan a public offering only when there is a need to raise funds for acq uisitions locally.''

The IPO is not even on the agenda of the company's board, which is meeting on July 11. ``The board will not have any discussions on IPO. The meeting will look only at the first quarter results,'' Mr. Ramaraj said.

Mr. Ramraj was reported in the media early last week as saying Sify will be ready for an IPO by September. Local acquisitions and ESOP scheme for employees were cited as the reasons behind the company's decision to plan an equity offering in the Indian m arkets.

According to him, when he mentioned September, it was not meant as a specific time for the offer _ it was rather an indication of the company's readiness for the offer. And to talk about an IPO now is ``very premature'', he added.

``The company's business plan has enough cash from the two rounds of ADR funding. There is no need for an IPO now. We still have an appetite for acquisitions, but nothing has been identified.'' Technically, ``the company will be ready for an IPO within t hree months after an acquisition possibility is identified,'' Mr. Ramaraj explained.

Sify, he said, was not inclined to accept the SEBI rule making it mandatory to issue shares worth 10 per cent of its market capitalisation for ESOP. As a result, the proposed ESOP scheme to cover all the company's employees will be delayed.

``The company's market capitalisation is worth Rs. 2.5-3 billions, and going ahead with ESOP scheme now will mean issuing shares worth about Rs. 3,000 crores. So, we are negotiating with SEBI on this and will wait for modified guidelines in this regard,' ' Mr. Ramaraj said.

Sify's performance in revenue earnings till now in this fiscal has lived up to market expectations. ``Analysts have predicted that our revenue will be $58 millions. We are well-placed to meet that expectation.''

Satyam Infoway's proposed plan to set up 1,000 cyber cafes across the country will be completed in the next 12 months. ``We went a little tight on it because of the private gateway issue. We will now be going full steam as we have tied up with Internatio nal Private Leased Circuit (IPLC).''

The ISP Association, of which Mr. Ramaraj is the President, is slated to hold a review meeting with VSNL on July 5 regarding the private gateway issue. Satyam has already got security clearance for a single window private gateway.